Silver is feeling the pressure from both the precious metals sector, with gold dropping to its lowest close in three months, and the industrial sector as investors worry that the economic recovery is stalling.
By Melissa Pistilli—Exclusive to Silver Investing NewsAt the beginning of the week, some analysts were betting a weakening US dollar would help silver continue the bullish run it started at the end of last week, bringing prices up over the $18 level to close at $18.12 an ounce Friday. However, after trading sideways most of Monday to pick up a mere 6 cents over Friday's close, silver prices tanked Tuesday on weak consumer confidence reports to close at $17.64 an ounce in New York. Silver is feeling the pressure from both the precious metals sector, with gold dropping to its lowest close in three months, and the industrial sector as investors worry that the economic recovery is stalling. Silver continued its six-week downtrend Wednesday as the latest Durable Goods report brought more pessimism over economic recovery into the markets. The price of silver dropped as low as $17.32 an ounce at the start of the trading day. The Consumer Confidence Index dropped to its lowest level in four months Tuesday to 50.4 on consumer concerns over high unemployment and continuing foreclosures in the US. This negative news had more of an impact on silver prices than the positive data coming from the US housing sector, which showed home prices rose for the second consecutive month in May. “The break yesterday off of the weak consumer confidence data underscores the market's dependency on economic news,” said Jaime Greenough, of futures representative at Global Securities, in a note Wednesday morning. Much to the chagrin of some economists who expected the Durable Goods reports to show a one percent gain, the Commerce Department's data showed demand fell for the second month in a row in June, especially in the machinery, primary metals and electronics sectors. The one percent drop was the largest since August of last year, a possible indication that economic recovery is floundering. Coming up at the end of the week, the GDP figure is anticipated to have a weak showing, which may place further short-term pressure on already reeling silver prices.